So the narrative on Monday appears to be that Trump is going to ultimately be forced to adopt a more conciliatory stance on trade. That’s a continuation of the narrative from last week, the only difference being that stocks are up midday as opposed to down.
Let me remind you that everyone was saying the exact same thing on Thursday evening (i.e. that Trump’s bark was worse than his bite) and then he woke up before dawn on Friday and doubled down on Twitter (“trade wars are good and easy to win”).
And then everyone was still saying the same thing headed into the weekend and he tripled down on Saturday (tweeting that he’ll “simply tax European cars“). Then Peter Navarro reiterated the point in a characteristically absurd series of comments on CNN Sunday morning.
Folks were still saying Trump would likely back down on Monday and then he quadrupled down on Twitter first thing, this time taking aim at Canada (who apparently hates American farmers) and of course Mexico (which is still bringing drugs).
So Paul Ryan jumped into the fray, saying he’s “extremely worried about the consequences of a trade war and is urging the White House to not advance with the plan.” He continued:
The new tax reform law has boosted the economy and we certainly don’t want to jeopardize those gains.
Maybe that will compel Trump to back down? Nope. Here’s what he told reporters when asked about Ryan’s comments during a photo op with Netanyahu:
Got that? Here it is:
No, we’re not backing down. We’ve got a very bad deal with Mexico and a very bad deal with Canada and it’s called NAFTA.
And then this:
If [Europe] wants to do something, we’ll just tax their cars that they send in here like water.
I think what’s important for folks to realize on Monday is that while Trump’s bark is most assuredly worse than his bite, his mental acuity is most assuredly even lower than everyone realizes, and that’s what’s dangerous.
It’s not so much that he’s going to sit down and make a calculated decision that aims to enact barriers to trade that are as aggressive as his rhetoric. Rather, it’s that he doesn’t make “calculated” decisions at all. He doesn’t know how to “calculate.”
Sure, he’s trying to check boxes off the list of promises he made on the campaign trail and in that sense, this is more about sending a political message than it is about actually upending global trade and commerce.
But you cannot depend on him to know how to get that right. He’s just making this up as he goes along. That’s conducive to mistakes. You can’t just assume that everyone else in the world is going to keep saying “well, let’s just let him get it out of his system because he doesn’t really mean it.”
This is like a drunken cowboy firing off a pistol in a saloon. He may not be trying to hit anyone, but it’s certainly possible that someone will get shot.
That’s the risk. Don’t forget that.